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February 2013 Investor Presentation – Devon Energy Corp

Devon Energy Corp · Feb 10, 2013 · 49 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

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  1. February 2013 Investor Presentation – Devon Energy Corp – slide 1
    Investor Presentation February 2013
  2. February 2013 Investor Presentation – Devon Energy Corp – slide 2
    NYSE: DVN www.devonenergy.com Slide 3 Devon Today Proved reserves: ?3.0 billion BOE (42% liquids) Q3 2012 production: 678 MBOED Production mix: 21% oil 16% NGLs 63% natural gas Significant midstream business 2012e operating…
  3. February 2013 Investor Presentation – Devon Energy Corp – slide 3
    Progress Report Highlights ? Oil production increased 22% year-to-date ? Jackfish oil production up 46% ? Permian Basin oil production up 30% ? Closed ?$4 billion of joint ventures in 2012 (Cash payments of $1.3 billion and drilling…
  4. February 2013 Investor Presentation – Devon Energy Corp – slide 4
    YSE: DVN www.devonenergy.com Slide 5 Devon?s Strengths Disciplined focus on per share results Deep inventory of development opportunities Strong, highly-visible oil growth Significant positions in emerging oil plays Superior…
  5. February 2013 Investor Presentation – Devon Energy Corp – slide 5
    NYSE: DVN www.devonenergy.com Slide 6 Financial Strength & Flexibility Cash and short-term investments: $7.5 billion (As of 11/7/12) Net debt-to-cap ratio: 15% Strong investment grade ratings ? Fitch: BBB+ ? Moody?s: Baa1 ? S&P:…
  6. February 2013 Investor Presentation – Devon Energy Corp – slide 6
    NYSE: DVN www.devonenergy.com Slide 7 Capital Allocation Criteria E&P capital projects ? Balancing resource capture and development (Exploration & leasehold capital: ?20% of E&P capital since 2009) Debt reduction ? Reduced net debt…
  7. February 2013 Investor Presentation – Devon Energy Corp – slide 7
    NYSE: DVN www.devonenergy.com Slide 8 Track Record of Success North American Onshore Historical Performance 240 223 168 220 207 182 2006 2007 2008 2009 2010 2011 233% 198% 269% 223% 175% 160% 2006 2007 2008 2009 2010 2011…
  8. February 2013 Investor Presentation – Devon Energy Corp – slide 8
    NYSE: DVN www.devonenergy.com Slide 9 Devon?s Risked Resource Base High-Quality and Balanced Note: Includes 12/31/11 proved reserves of 3.0 BBOE. Risked Resource By Product (BBOE) Oil (29%) 4.7 NGLs (19%) 3.1 Gas (52%) 8.4 Total…
  9. February 2013 Investor Presentation – Devon Energy Corp – slide 9
    NYSE: DVN www.devonenergy.com Slide 10 Developing the Resource Base E&P Game Plan Goal: Maximize return on investment ? Balance resource capture and resource development ? Current focus on high-margin oil opportunities ? Build…
  10. February 2013 Investor Presentation – Devon Energy Corp – slide 10
    NYSE: DVN www.devonenergy.com Slide 11 Joint Venture Rationale Objective: Utilize partners in new ventures exploration ? Improves capital efficiency ? Accelerates de-risking and commercialization ? Mitigates exploration risk ?…
  11. February 2013 Investor Presentation – Devon Energy Corp – slide 11
    NYSE: DVN www.devonenergy.com Slide 12 2012 E&P Capital Allocation Jackfish Other Canada $6.9 ? $7.1 Billion 73% 18% 9% Development activity Leasehold capture ?100% of capital allocated towards oil and liquids-rich projects…
  12. February 2013 Investor Presentation – Devon Energy Corp – slide 12
    NYSE: DVN www.devonenergy.com Slide 13 144.4 122.5 105.9 100.9 89.7 74.9 65.7 2006 2007 2008 2009 2010 2011 Q3 YTD- 2012 Significant Oil Production Growth North American Onshore Production Data in MBOPD
  13. February 2013 Investor Presentation – Devon Energy Corp – slide 13
    NYSE: DVN www.devonenergy.com Slide 14 2012 Capital Program Delivering Strong Oil & Liquids Growth Oil 22% NGLs 17% Gas 61% 670 - 680 MBOED Q4 2012e Target Rates Oil production ? Annual growth rate: 18% - 20% ? Driven by…
  14. February 2013 Investor Presentation – Devon Energy Corp – slide 14
    NYSE: DVN www.devonenergy.com Slide 15 Attractively Hedged Oil Hedges Q4 2012: 134,000 BOPD with a protected price of $96 per barrel (?90% of forecasted oil production) 2013: 76,000 BOPD with a protected price of $97 per barrel…
  15. February 2013 Investor Presentation – Devon Energy Corp – slide 15
    NYSE: DVN www.devonenergy.com Slide 16 Permian Basin Overview Oil Opportunities Net risked resource: 2.8 BBOE Risked locations: >8,000 Net acreage: 1.3 million basin-wide Q3 2012 net production: ? 65 MBOED (77% liquids) Activity…
  16. February 2013 Investor Presentation – Devon Energy Corp – slide 16
    Permian Basin Oil Development Projects Midland Wolfberry Conventional Ector Midland Andrews Gaines Dawson Martin Upton Crane Winkler Ward Loving Reeves Pecos Lea Eddy Bone Spring & Delaware New Mexico Texas NW Shelf…
  17. February 2013 Investor Presentation – Devon Energy Corp – slide 17
    Permian Basin Oil Exploration Projects Midland Wolfcamp Shale (Midland Basin) Ector Midland Andrews Gaines Dawson Martin Borden Howard Mitchell Nolan Scurry Fisher Glasscock Sterling Coke Tom Green Irion Schleicher…
  18. February 2013 Investor Presentation – Devon Energy Corp – slide 18
    Mississippian Light-Oil Exploration Oklahoma Kansas Logan Lincoln Creek Garfield Osage Kay Grant Alfalfa Major Woods Sumner Harper Barber Kingman Devon Acreage Cowley Sedgwick Devon/Sinopec JV Acreage Payne Pawnee…
  19. February 2013 Investor Presentation – Devon Energy Corp – slide 19
    Field characteristics ? Low F&D ? Flat production profile ? Long reserve life >20 years Jackfish ? Top-tier operating performance ? Scheduled plant maintenance completed ? Q3 2012 net production: 24 MBOPD Jackfish 2 ? Q3 2012 net…
  20. February 2013 Investor Presentation – Devon Energy Corp – slide 20
    NYSE: DVN www.devonenergy.com Note: Industry average includes: Bolney-Celtic, Christina Lake, Firebag, Foster Creek, Great Divide, Hangingstone, Long Lake, MacKay River, MEG, Orion, Senlac, Surmont, Tangleflags, and Tucker. Source:…
  21. February 2013 Investor Presentation – Devon Energy Corp – slide 21
    NYSE: DVN www.devonenergy.com Slide 22 SAGD Development Timeline Timing Range of Expected Plant Start-Up Jackfish 1 (35 MBOD) Jackfish 2 (35 MBOD) Jackfish 3 (35 MBOD) Jackfish East (20 MBOD) Pike 1A (35 MBOD) Pike 1B (35 MBOD)…
  22. February 2013 Investor Presentation – Devon Energy Corp – slide 22
    NYSE: DVN www.devonenergy.com Slide 23 Long-Term Production Outlook Thermal Oil Net Barrels Per Day 44,300 Q3 2012 2020 150,000 175,000 Net Risked Resource: ?1.4 BBO
  23. February 2013 Investor Presentation – Devon Energy Corp – slide 23
    Dewey Blaine Custer Washita Caddo Grady Canadian Cana Plant NYSE: DVN www.devonenergy.com Slide 24 Cana Woodford Shale Liquids-Rich Gas Development Net risked resource: 11.4 TCFE Risked locations: ?5,400 Net acreage: 255,000…
  24. February 2013 Investor Presentation – Devon Energy Corp – slide 24
    Barnett Shale Liquids-Rich Gas Development Net acreage: 620,000 Low average royalty burden: 18% Q3 2012 net production: 1.4 BCFED (8% year-over-year growth) 2012e program: >30% of production is liquids Significant free cash flow…
  25. February 2013 Investor Presentation – Devon Energy Corp – slide 25
    NYSE: DVN www.devonenergy.com Slide 26 Why Own Devon? Disciplined focus on per share results Deep inventory of development opportunities ? World-class SAGD position ? Strong Permian Basin position ? Dominant positions in Barnett &…
  26. February 2013 Investor Presentation – Devon Energy Corp – slide 26
    NYSE: DVN www.devonenergy.com Slide 29 Oil Hedges Oil Hedges Q4 2012 77,000 BOD collared: $90 floor and $122 ceiling 57,000 BOD swapped at $105 19,500 BOD of call options sold at $95 2013 45,000 BOD collared: $91 floor and $116…
  27. February 2013 Investor Presentation – Devon Energy Corp – slide 27
    NYSE: DVN www.devonenergy.com Slide 30 Natural Gas Hedges Natural Gas Hedges Q4 2012 1.3 BCFD collared: $3.50 floor and $4.17 ceiling 658 MMCFD swapped at $3.92 488 MMCFD of call options sold at $6.00 2013 449 MMCFD collared:…
  28. February 2013 Investor Presentation – Devon Energy Corp – slide 28
    NYSE: DVN www.devonenergy.com Slide 31 Mississippian Tuscaloosa Shale Rockies Oil Utica Ohio Michigan Growing the Resource Base New Ventures Exploration Sinopec Joint Venture ? $2.5 billion transaction ($900 million cash and…
  29. February 2013 Investor Presentation – Devon Energy Corp – slide 29
    NYSE: DVN www.devonenergy.com Slide 32 Sinopec Joint Venture Assets Five Oil and Liquids-Rich Plays Mississippian Rockies Oil Utica Ohio Tuscaloosa Michigan JV Acreage (Net to DVN) 230,000 (153,000 net) 320,000 (213,000 net)…
  30. February 2013 Investor Presentation – Devon Energy Corp – slide 30
    NYSE: DVN www.devonenergy.com Slide 33 Canadian Oil Sands Industry Overview In-Situ Projects Mining Projects Project Type Peace River Athabasca Cold Lake Oil Sands Region Fort Hills Horizon Joslyn Creek Syncrude Suncor…
  31. February 2013 Investor Presentation – Devon Energy Corp – slide 31
    NYSE: DVN www.devonenergy.com Slide 34 Jackfish East Jackfish acreage (100% WI) >15m (?50ft) continuous bitumen pay 1 Mile Jackfish 3 Jackfish East 2015 2016 2017 2018 2019 Regulatory Application & Review Engineering Plant…
  32. February 2013 Investor Presentation – Devon Energy Corp – slide 32
    NYSE: DVN www.devonenergy.com Slide 35 Pike Project Overview Pike leasehold ? 50% operated working interest ? Similar reservoir characteristics to Jackfish ? Up to five 35 MBOPD SAGD development phases Potential Pike 1…
  33. February 2013 Investor Presentation – Devon Energy Corp – slide 33
    NYSE: DVN www.devonenergy.com Slide 36 Pike Stratigraphic Drilling Confirms High-Quality Reservoir Pike Jackfish Depth (Ft, TVD) 1,400 ? 1,560 1,320 ? 1,380 Pay Thickness (Ft) 49 - 144 49 ? 164 Porosity (%) 30 ? 35 30 - 33…
  34. February 2013 Investor Presentation – Devon Energy Corp – slide 34
    NYSE: DVN www.devonenergy.com Slide 37 Solvents Potential Benefits ? Increases production rates per well and plant production capacity ? Lower steam-oil ratios (15% - 50% decrease) ? Reduces plant emissions Risks ? Access to…
  35. February 2013 Investor Presentation – Devon Energy Corp – slide 35
    NYSE: DVN www.devonenergy.com Slide 38 Small-Scale SAGD Reusable SAGD facilities designed to exploit smaller accumulations of bitumen (4 prospects identified) ? Targeted resource: 35-70 MMBO per project ? Peak production rates up to…
  36. February 2013 Investor Presentation – Devon Energy Corp – slide 36
    NYSE: DVN www.devonenergy.com Slide 39 Heavy Oil Midstream Infrastructure Access Pipeline EDMONTON HARDISTY Express P/L To U.S. Rockies Access Bitumen Blend Pipeline Access Diluent Pipeline Oil Pipelines ? ?200 mile dual…
  37. February 2013 Investor Presentation – Devon Energy Corp – slide 37
    NYSE: DVN www.devonenergy.com Slide 40 Heavy Oil Demand Increased refinery capacity for heavier crudes ? 340 MBOPD of incremental demand by mid-2013 (Detroit & Whiting) Significant pipeline expansions ? Seaway: 250 MBOD by early 2013…
  38. February 2013 Investor Presentation – Devon Energy Corp – slide 38
    NYSE: DVN www.devonenergy.com Slide 41 Iron River Manatokan End Lake Lloydminster Lloydminster Oil Development Net acreage: ?600,000 Low-risk development Strong operating margins Q3 2012 net production: 37 MBOED 2012 plans:…
  39. February 2013 Investor Presentation – Devon Energy Corp – slide 39
    NYSE: DVN www.devonenergy.com Slide 42 Canada Exploration Oil & Liquids Opportunities Net prospective acres: >4 million Net unrisked resource: 2.2 BBOE 2012 plans: Drill 90 wells Testing >10 new play types including: ? Viking…
  40. February 2013 Investor Presentation – Devon Energy Corp – slide 40
    NYSE: DVN www.devonenergy.com Slide 43 Granite Wash Oil & Liquids-Rich Development Net acreage: 63,600 Legacy land position held by production Low average royalty burden: 19% Q3 2012 net production: 18 MBOED Liquids drive superior…
  41. February 2013 Investor Presentation – Devon Energy Corp – slide 41
    NYSE: DVN www.devonenergy.com Slide 44 Performance Reserve Revisions Barnett Shale Year Performance Reserve Revisions (BCFE) 2004 +186 2005 +366 2006 +30 2007 +240 2008 +132 2009 +288 2010 +156 2011 +30
  42. February 2013 Investor Presentation – Devon Energy Corp – slide 42
    NYSE: DVN www.devonenergy.com Slide 45 East Texas Unconventional Haynesville / Bossier Shale Net prospective acres: 110,000 Significant portion of acreage held by production or fee Low average royalty burden: 14% Low cost of entry…
  43. February 2013 Investor Presentation – Devon Energy Corp – slide 43
    NYSE: DVN www.devonenergy.com Slide 46 Carthage Field Waskom Bethany Angelina San Augustine Sabine Shelby Rusk Panola Gregg Harrison Marion Upshur Camp Cass Texas Appleby Net acreage: 194,000 Working interest: 86% Low…
  44. February 2013 Investor Presentation – Devon Energy Corp – slide 44
    NYSE: DVN www.devonenergy.com Slide 47 Groesbeck Net acreage: 135,000 Working interest: 72% Low average royalty burden: 14% Q3 2012 net production: 65 MMCFED Nan-Su-Gail Dew Bald Prairie Personville Oaks Limestone Freestone…
  45. February 2013 Investor Presentation – Devon Energy Corp – slide 45
    NYSE: DVN www.devonenergy.com Slide 48 Horn River Basin Net acreage: 175,000 Natural gas shale play Thickest section of the basin Minimal drilling required to hold acreage Net risked resource: ?7 TCFE Risked locations: >1,500…
  46. February 2013 Investor Presentation – Devon Energy Corp – slide 46
    NYSE: DVN www.devonenergy.com Slide 49 Arkoma Woodford Shale Net acreage: 39,000 Low cost of entry: ?$400/acre Low average royalty burden: 20% Acreage held by production Q3 2012 net production: 53 MMCFED Strategic midstream…
  47. February 2013 Investor Presentation – Devon Energy Corp – slide 47
    NYSE: DVN www.devonenergy.com Slide 50 Washakie Net acreage: 162,000 Working interest: 76% Q3 2012 net production: 123 MMCFED Low-risk, tight sand gas WY UT CO Washakie
  48. February 2013 Investor Presentation – Devon Energy Corp – slide 48
    NYSE: DVN www.devonenergy.com Slide 51 Resource By Asset Strong Foundation for Growth Unrisked Resource Proved Reserves Additional Risked Potential Total Risked Resources Permian Basin 7.6 0.2 2.6 2.8 Barnett Shale 4.3 1.2…
  49. February 2013 Investor Presentation – Devon Energy Corp – slide 49
    NYSE: DVN www.devonenergy.com Slide 52 Repositioning Proceeds Pre-Tax Proceeds Closing Maersk - Deepwater GOM $1.3 Q1 2010 BP ? Deepwater GOM $1.8 Q2 2010 Apache ? GOM Shelf $1.1 Q2 2010 CNOOC, CVX, BP ? China $0.6 Q2 & Q3 2010 BP…

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